Will accounting reform be bad for sponsors? The effects of pending pension and other postemployment benefit accounting reform on corporate plan sponsors will be numerous and complex, and require analysis instead of a gut reaction. Indeed, a thorough analysis may yield a very different picture than expected.(pensions)

Financial Executive, May, 2006 by Friedman, Eric

Many believe the pending accounting reform of pensions and other postemployment benefits (OPEB) will be bad for all corporate plan sponsors, will contribute to a decline in the stock price of sponsors with substantial liabilities and will ultimately increase the number of plans that freeze and terminate. This isn't the whole story. It may not even be half the story.

The first phase of the Financial Accounting Standards Board's (FASB) two-part comprehensive review of pension and OPEB accounting will dramatically change corporate balance sheets. On March 31, FASB released an Exposure Draft (ED) with a comment period through May 31, and an effective date of fiscal years ending after Dec. 15, 2006 for the most substantial changes. FASB plans to host a public...

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